Year-End Charitable Giving: What to Know for 2025

As the end of the year approaches, it’s time to start thinking about giving thanks for what you have and considering how to pass your blessings on to others. The end of the year is one of the most beneficial times for charities to receive donations. It’s often when the communities that they aid need some extra help, and end-of-year donations can help organizations balance their books, too. So this may be a good time to consider sharing the love with others and donating to a charity of your choice.

Plus, there’s a benefit beyond just feeling good about your choices: Year-end giving can give you tax benefits. Planning your giving well will help you maximize benefits to you and to the organizations that you give to.

So, put these charitable giving tax strategies into effect before the end of the year and let the generosity multiply. And if you need help making sure you’re saving enough throughout the year, speak to a Farm Bureau agent.

Tax-Deductible Donations for Charitable Gifts

There are limits on how much of your giving goes toward deductions on your taxes. Before you give, be sure to talk to your tax advisor about your charitable donations and set your expectations appropriately. 

If you want to claim a charitable donation on your taxes, the donation must meet certain requirements. Here are a few to consider, though your advisor can give you the full rundown.

• Donate to a Qualifying Organization. For a donation to be tax deductible, the donation must be made to a qualified organization. Qualified charitable organizations are organizations with tax-exempt status that support philanthropic, nonprofit or civic duties, according to the IRS. The IRS maintains a search tool to make it easy to find out if the organization you’re thinking of donating to qualifies. 
• Document Your Contributions. It’s important to document your contributions to charitable organizations so that when you file, you have proof of your giving. You can provide proof in the form of a receipt or invoice from the qualified charity. You may also be able to give proof with a credit card statement or other financial records detailing the donation, depending on the size of the donation. Read up on the rules for documentation before you donate so you know what to get from the organization.   
• Know Your Deadlines. For a donation to be eligible for a tax deduction in 2025, the donation must be received by 11:59 PM on December 31. To ensure tax deductibility, it’s a good idea to make any planned donations well in advance of this deadline.
• Itemize Your Deductions. To receive a tax deduction for your charitable contribution, you must itemize your deductions on a Schedule A (Form 1040), so the IRS can see what expenses should be taken out of your taxable income. Talk to your advisor for more instructions on how to itemize your deductions.

Tax-Smart Charitable Giving Strategies to Increase Your Impact

Many people know that they can deduct their donations from their income taxes. But savvy tax planning strategies can maximize your impact, so increasing your knowledge can have a big effect. Here are charitable giving tax strategies that can help you prepare for this holiday season and beyond. 

Prioritize Your Giving Based on Taxable Events

Certain financial events can impact your tax liability. For example, realizing gains in the stock market or receiving income from rental property can push you into a higher tax bracket this year. If you increase your charitable giving, you can help offset those earnings while also helping others. 

Similarly, if you anticipate being in a higher tax bracket next year, you could defer these donations to January to help decrease your tax liability next year. 

Consider Bunching Gifts

If you are planning on making a charitable donation before the end of this year, check to see if itemized deductions will push you above your standard deduction. If your itemized deduction will not be greater than the standard deduction, some advisors talk about the tax strategy of “bunching,” in which you would combine multiple years’ worth of charitable contributions in one year to maximize your tax benefit. Check with your advisor to see if this might be advisable for your financial situation.

You could also consider a donor-advised fund as a method of bunching. A donor-advised fund is a separately identified investment fund or account kept for the sole purpose of supporting charitable organizations you care about. By contributing multiple years’ worth of giving to the account this year, you could lower your tax liability this year while continuing to make annual gifts of the same size to the charities you support. Again, your advisor is the best person to help you decide if this strategy is right for you.

Give Appreciated Non-Cash Assets

Appreciated non-cash assets could be real estate, private business interests or even stocks. By contributing an appreciated asset that you’ve held long-term, you’re usually donating a pre-tax asset, which can help you give more impactful gifts. This can also help eliminate taxable income and allow you to receive a larger tax deduction. 

Contribute From Your IRA

Once you turn 73, you are required to start taking required minimum distributions (RMDs), a required distribution from a qualified retirement account. RMDs are required each year and are counted as taxable income. But instead of putting RMDs into your account, you can transfer them to a charity through a qualified charitable distribution (QCD), furthering your giving goals and reducing your taxable income. Talk to your advisor if you’re thinking about using this strategy.

Consider Charitable Giving in Your Estate Plan

You can help ensure your philanthropic wishes are met by adding charitable giving to your estate plan. Through a will or trust, you could gift funds to an organization or to a beneficiary. By using estate planning strategies like charitable giving, you may also be able to reduce your estate tax liability. 

Share Your Wealth With Charitable Giving

Consider making annual gifts a part of your financial plan. Reach out to Farm Bureau to talk through your financial goals today.